Head in the clouds – new opportunities emerge for African cloud-based services as bandwidth improves

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Increased bandwidth in Africa has opened up new opportunities for cloud-based services. Unfortunately discussions about these kinds of cloud-based services have generated…well, clouds fully of empty corporate jargon. This week Russell Southwood looks at some different examples of actual cloud-based services that are being used successfully in Africa to try and get a handle on where the opportunities lie.

Orange Business has launched two cloud-based services: Flexible Computing Express (just IT infrastructure with company applications on top) and Flexible Computing Premium (Orange providing some applications and managing or sharing managing the service). These services were launched in Europe initially at are aimed squarely at the corporate sector. It has attracted 150 customers for them in just 2 months but these are mostly in France.

According to Philippe Jacquier, Head of IT Services and Solutions, Africa, Middle East and Russia, Orange Business:”90% of these initial customers are SMEs but not outside of France, where it is being taken up by multinationals. In this type of company there are thousands of non-critical applications which they are happy to host on this platform.” (see video link at the bottom of this article)

Anglo Gold Ashanti began using the service on a pilot basis at the end of last year and it became fully operational in January 2012. The advantages it sees in the service are two-fold: it could move things offsite and get predictable latency and it has the flexibility to grow and shrink its requirements on a monthly basis:

”In the past, the Mine Manager would find himself looking after IT. Now he can get support. This platform is connected through our VPN and the Internet and Anglo Ashanti Gold have an MPLS network run by Orange.” So connecting to the cloud can happen through either a VPN or the Internet, depending on the resilience required by the company.

There is a 100-millisecond latency and this allows real-time applications like voice and desktop management for many users and this compares with an average of 350-milliseconds (including satellite links) from Johannesburg to the Paris data centre:”Where the data is routed depends on the connectivity. Where we handle the WAN, we can get lowest latency. With improvements in latency, companies are becoming much more network-centric”

Orange Business has also partnered with SITA that provides the underlying architecture for airline operations, who want to provide services for local carrier SAA.

According to Jacquier:”The market will grow itself.  The key arguments are around cost and functionality but a mindset change is needed. Companies can save human resources.” For the wary, companies can – like Anglo Gold Ashanti- pilot using the service. Jacquier can provide an Excel spreadsheet that shows how the pricing works and the likely charges based on the number of uses per day.

These kinds of services will cause a large expansion in data centres. Orange Business will set up 8 data centres. The first is in Paris (another will be added there) and three are being constructed in Frankfurt, Singapore and Atlanta. A further three will then be added: Johannesburg, Hong Kong and Sydney.

Local South African company Securicom has been providing cloud-based services for over ten years. Its Regional Sales Manager, Richard Broeke sees a transition happening:”In the past, there was the public Internet and the private, corporate cloud. Now there’s a blurring between these two. We secure the private cloud and the public cloud infrastructure.” It targets what it describes as the mid-market, companies with between 250 and 10,000 employees and delivers up to 15 different services to them including: e-mail security and archiving, web security, managed firewalls, data storage, end-point management and cloud optimization.

Their arguments are very similar to those of Orange Business but nuanced slightly differently:”With shared infrastructure, you can get the latest technology at a cheaper price. The per device billing model means you can have 100 seats this month and half that amount next month.”

It has provided service for an African bank that had challenges with its deployed applications because the bandwidth was expensive and low quality:”We put our WAN optimization into 32 branches in Kenya. They’re now getting LAN-like responses across all of the WAN, even in remote locations. We do this through supplying optimization technology and 24 hour monitoring.”

“The cost savings are probably going to be greatest for a small organization. If you take something like Microsoft Exchange, because of cost, it’s only going to be available to a certain size of company. It will be a lot more affordable through a cloud-based service. There are massive opportunities in Africa in terms of providing cloud-based services. Companies tend to deal with several different companies but we can provide a one-stop shop with end-to-services and that’s when you get economies of scale.”

At the other end of the scale completely are end user services for individuals and very small companies. Opportunities here are focused around three things: back-up; synch between the proliferating number of devices (laptop, phone and tablet); and cloud-based, cyber-cafe-style services offering “virtual computers” by login (that also synch with certain phones).

Kenya’s M-Wingu was set up by Charles Musungu to address the simplest but often most important of needs: backing up people’s phone contacts so they don’t lose them when their phone is stolen or falls into the toilet (don’t laugh – it seems to happen quite often if my conversations are anything to go by.).

”We set up M-Wingu to help individuals to synch their contacts across all devices and to restore contacts. It’s software as a service and the consumer pay a subscription fee that the operators charge as a percentage per day.’ In Kenya, it costs KS10 per month and in South Africa 80 cents a month and generally works out at around 20% of ARPU.

It has pilots operating with three major operators and there are currently 1,000 users across all of the pilots. Soon it will go live with an operator across 9 markets. The service detects what phone is connected and which new contacts need backing up:”The cloud hosting for the service is provided by Google and Amazon and the data centres are in the USA. However, the back-end applications are hosted in Kenya. There is a robust level of encryption.”

As users do more things involving content, services and transactions on their phones and other devices, they will need to have both the synch and back-up functions. The key question will be whether they will see whether they need to be able to afford the service.

The wide open market space is to provide individual customers a “virtual computer” that they can log into anywhere there’s a machine or device and bandwidth. If African cyber-cafes were smarter, this would be a good replacement for the dwindling access market, making software as a service an ideal business: a small monthly sum that would be a great deal less than even the current much cheaper laptops and tablets. Who’s going to be first to start it?

To follow the exchanges about this news, you need to be on Twitter. Follow us on @BalancingActAfr

This week on Balancing Act’s You Tube channel:

Editor of Stuff magazine Toby Shapshak on the changes in the use of devices in Africa

Philippe Jacquier, Orange Business on the launch of its cloud-based service, Flexible Computing

Dare Okoudjou, CEO, MFS Africa on selling mobile life insurance and the potential for mobile health insurance

Johan Nel, CEO, Umuntu Media on the launch of Mimiboard, an online pinboard for Africa

Roukaya Kasenally, Director of Comms, AMI on its new mobile news apps incubator

Ofer Ronen, Sales Director - East Africa, Gilat Satcom on doing business in South Sudan